NPD Says Food-Price Increases Will Affect Consumer Behavior

The NPD Group has some interesting insights on how the increase in wholesale food prices may not only affect the actions of food retailers and foodservice operators, but also consumers. In a recent release citing its more than three decades of research into consumer eating behaviors, both at- and away-from-home, the research firm noted the following: “Historically, consumers have never let food costs rise faster than their incomes and have managed their food spending accordingly, whether choosing to eat at home or away from home.”

Harry Balzer, NPD’s chief industry analyst, said “With food inflation accelerating…Americans will make well-thought-out choices this year on how they will feed themselves. It amounts to ‘relative food inflation,’ ” he said. “They have so much to spend on food and they will carefully pick and choose how they spend it.”

Noting that 72% of meals are still prepared at home, 18% come from foodservice and the rest are skipped or from unknown sources, NPD said the past two years have seen consumers “pull back on their use of restaurants,” with total visits falling by 2.4 billion visits to 59.1 billion. While traffic is beginning to strengthen, high unemployment continues to hamper foodservice growth.

“Food prices (at the consumer level) so far are up less than 2% from the depressed year-ago levels, when they were dropping by 2%,” said Balzer. “Supermarket prices are still below the levels of 2008. This is really a story about the upheaval caused by the 2008 food-price increases. We have yet to see how it will play out this time,” he said.